Research & Commentary: Renewable Power Mandate Would Be Too Costly for Nevada

Published October 30, 2018

This November, Nevada voters will consider Question 6, the Renewable Energy Standards Initiative. The ballot initiative, backed and funded by California billionaire and climate alarmist Tom Steyer through NextGen Climate Action and Nevadans for a Clean Energy Future, would mandate Nevada utilities acquire 50 percent of their electricity generation from renewable sources by 2030. Nevada’s current mandate, the Energy Portfolio Standard, was established in 1997 and requires Silver State utilities generate 25 percent of their electricity from renewable sources by 2025.

Renewable power mandates—often referred to as “renewable portfolio standards” (RPS)—force expensive, heavily subsidized, and politically favored electricity like wind and solar on ratepayers and taxpayers while providing few, if any, net environmental benefits.

A 2016 study by Timothy Considine, a professor of economics at the University of Wyoming, who evaluated the impact of RPS mandates in 12 states, found Nevada’s Energy Portfolio Standard (EPS) resulted in $520 million in additional costs in 2016 and will increase to $570 million in additional costs in 2030. Even worse, more than 12,600 jobs were lost because of RPS in 2016.

“Annual losses in Nevada value added range from $1.75 billion in 2016 to $1.8 billion in 2040, and remain over $1 billion per year out to 2040,” the report notes. “Employment levels are 7,800 to 12,000 below employment in the base case without renewable energy portfolio standards….Net annual losses in value added from Nevada’s RPS goals are $1.7 billion in 2016, $1.8 billion in 2020, $1.7 billion in 2025, and remain over $1 billion through the end of the forecast horizon. Employment levels are over 11 thousand lower in 2016, 12 thousand lower in 2020, and 11.9 thousand lower in 2025.”

“The costs of avoiding carbon dioxide emissions using renewable portfolio standards in Nevada are higher than [Environmental Protection Agency] estimates of the social cost of carbon assuming a 5 percent discount rate but are slightly below the social cost of capital assuming a 3 percent discount rate after 2030,” the report concludes. “From a global perspective, therefore, renewable energy portfolio standards in Nevada are most likely an inefficient means to address global climate change if one is using a relatively low discount rate for future damages associated with global climate change. From the viewpoint of the Nevada economy, however, renewable portfolio standards raise electricity costs that on balance result in a net reduction in the state’s value added and employment even after accounting for the economic stimulus that building and operating renewable energy facilities provide.”

“Doubling the renewable energy mandate to 50 percent by 2030 will do two things: Prices will rise, and electric power reliability will decline,” Michael Schaus, communications director for the Nevada Policy Research Institute, told Environment & Climate News. “The current renewable power mandate is already high, and increasing it by the large amount proposed in Question 6 would force prices to climb even higher while reducing Nevadans’ options to obtain affordable energy from a variety of sources.”

In the welcome event voters reject Question 6 this November, Silver State legislators would do well to repeal the costly and inefficient EPS altogether. Eliminating EPS would reduce electricity prices, raise living standards, stimulate long-term economic growth, and create jobs—which would substantially benefit all Nevadans.

The following documents provide more information about renewable mandates.

Evaluating the Costs and Benefits of Renewable Portfolio Standards
This paper by Timothy J. Considine, a distinguished professor of energy economics at the School of Energy Resources and the Department of Economics and Finance at the University of Wyoming, examines the renewable portfolio standards (RPS) of 12 different states and concludes while RPS investments stimulate economic activity, the negative economic impacts associated with higher electricity prices offset the claimed economic advantages of these RPS investments.

Ten State Solutions to Emerging Issues
This Heartland Institute booklet explores solutions to the top public policy issues facing the states in 2018 and beyond in the areas of budget and taxes, education, energy and environment, health care, and constitutional reform. The solutions identified are proven reform ideas that have garnered significant support among the states and with legislators.

The Social Benefits of Fossil Fuels
This Heartland Policy Brief by Joseph Bast and Peter Ferrara documents the many benefits from the historic and still ongoing use of fossil fuels. Fossil fuels are lifting billions of people out of poverty, reducing all the negative effects of poverty on human health, and vastly improving human well-being and safety by powering labor-saving and life-protecting technologies, such as air conditioning, modern medicine, and cars and trucks. They are dramatically increasing the quantity of food humans produce and improving the reliability of the food supply, directly benefiting human health. Further, fossil fuel emissions are possibly contributing to a “Greening of the Earth,” benefiting all the plants and wildlife on the planet.

Climate Change Reconsidered II: Fossil Fuels – Summary for Policymakers—summary-for-policymakers
In this fifth volume of the Climate Change Reconsidered series, 117 scientists, economists, and other experts assess the costs and benefits of the use of fossil fuels by reviewing scientific and economic literature on organic chemistry, climate science, public health, economic history, human security, and theoretical studies based on integrated assessment models (IAMs) and cost-benefit analysis (CBA).

Less Carbon, Higher Prices: How California’s Climate Policies Affect Lower-Income Residents
This study from Jonathan Lesser of the Manhattan Institute argues California’s clean power regulations, including the state’s renewable power mandate, is a regressive tax that harms impoverished Californians more than any other group. 

Research & Commentary: Higher State Support for Green Energy Increases Energy Costs for Consumers–commentary-higher-state-support-for-green-energy-increases-energy-costs-for-consumers?source=policybot
Heartland Institute Policy Analyst Tim Benson discusses an analysis by the Daily Caller News Foundation (DCNF), which found, “States which offered rebates, buy-back programs, tax exemptions and direct cash subsidies to green energy were 64 percent more likely to have higher than average electric bills. For every additional pro-green energy policy in a state, the average price of electricity rose by about .01 cents per kilowatt-hour.”

The Status of Renewable Electricity Mandates in the States
The Institute for Energy Research finds states with renewable electricity mandates have on average 40 percent higher electricity rates than those without such mandates. 

What Happens to an Economy When Forced to Use Renewable Energy?
The Manhattan Institute conducted an economic analysis of the effects renewable portfolio standards (RPS) had on the average price of electricity in states with mandates compared to those without mandates. The study found residential and commercial electricity rates were significantly higher in states with RPS mandates than in states without them. 


Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this subject, visit Environment & Climate News, The Heartland Institute’s website, and PolicyBot, Heartland’s free online research database.

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